If you couldn’t tell from a quick scan at your local supermarket, it’s not uncommon for a handful of companies to dominate a specific product category.

Companies talk about all types of business objectives, from R&D spending to supply chain initiatives to product development. But at the end of the day, most have the exact same overriding goal in mind — to steal market share from rivals and grab a bigger piece of the pie.

Whether it’s an entrenched brand, a one-of-a-kind technology, or just plain old-fashioned economies of scale, strong players will always feast on the weak — acquiring the most desirable rivals and killing off the rest one by one. And with Darwinian capitalism always at work, the biggest gains will accrue to the fittest.

But a company doesn’t have to be a runaway leader playing for huge stakes. Even in a $5 billion industry (relatively small by Wall Street standards), just a 3% or 4% pickup in market share by an up-and-comer can translate into hundreds of millions in additional sales. And market leaders generally enjoy bargaining power over suppliers and other perks, which can fatten the bottom line even more.

Two Favorite Category Killers
The collapse of rivals like Circuit City and Rex has freed up more than $8 billion in annual sales, and Best Buy (NYSE: BBY) has rushed in to fill the void.

The company continues to expand internationally with an ambitious plan to introduce big box superstores in the U.K. as early as next spring.

There aren’t too many companies that can claim to have picked up market share for 15 consecutive quarters like Best Buy. The company has had to pare back prices to woo some customers, and slimming margins have weighed on the shares.

But my staff and I are always pleased to see forward-looking management sacrifice today in order to reap bigger rewards tomorrow. Best Buy’s leadership position appears unassailable — if not for its commitment to service, then for an unmatched selection of merchandise that is broad enough to please even the most ardent technophile.

Now that the worst of the recession appears to have passed, Best Buy’s future looks bright.

After assimilating the assets (and customer bases) of over a dozen rivals, Cal-Maine Foods (Nasdaq: CALM) has become the undisputed king of the shell egg business. The firm has established relationships with nearly every major food retailer in 28 states. Last year it sold 678 million dozen eggs — about one-in-seven consumed nationwide.

That growth has propelled the stock to a prodigious 4-digit gain in the past decade.

How to Find the Next Up-and-Comers
Of course, there are plenty of other examples. Ceradyne (Nasdaq: CRDN) has delivered a +1,000% return during the past decade thanks to its dominance in the military body armor market. Prior to the downturn, CarMax (NYSE: KMX) shares had been racing alongside a growing number of used car superstores. We could say similar things about companies like Monsanto (NYSE: MON).

It’s obviously best to look for businesses with room to grow rather than those whose market share is nearly maxed out. And be cognizant of margins, as companies that slash prices to gain customers usually sacrifice profits to do so — such growth isn’t sustainable.

Finally, keep overall industry economics in mind. Grabbing a larger share of a fixed pie is nice, but if the industry itself is expanding as well, then the rewards can be twice as sweet.

P.S. — I’ve identified another top “category killer” that I added to my “Growth” portfolio in the October issue of StreetAuthority Market Advisor. Get the name of this pick when you subscribe, plus get get my exclusive report: 11 Surprising Investment Predictions for 2010. Click here to learn more.